*China’s fixed-asset investment grew 20.2 percent in the first eight months of this year compared with the same period last year. It was the second-lowest pace since December 2002; only May of this year was marginally lower. Even this number could have been exaggerated by double-counting and replacement of existing factory equipment and buildings.

*Local government investment spending in August rose at its slowest pace since December 2001 — and local government investment spending in China is 18 times as large as central government investment spending. (Local authorities are strapped for cash because their main source of revenue, land sales, has declined and they are heavily in debt from profligate spending during the boom years). The importance of local versus central government spending suggests that even if the central government $158bn stimulus package is real, it won’t make that much of a difference.

*Manufacturers are retreating from ambitious central and local government production goals as they struggle with bloated inventories of unsold goods. Even the service sector, still underdeveloped and widely seen by economists as full of potential, is showing signs of distress.

A further worry is that as China confronts real GDP growth that could fall to as low 3-5 percent in 2012, it will resort to attempting to relieve its manufacturing surpluses through increased subsidies for exports.

“The Chinese government is expected to launch a package of measures to support the nation’s struggling exports in mid-September, the first such move since the global financial crisis, two sources from the Ministry of Commerce told China Daily,” wrote the newspaper.

“The measures cover a wide range of issues including tax rebates, insurance, credit, taxes, customs clearance and other tools to facilitate foreign trade, said the two sources.”